HALF YEAR RESULTS 2013Back
Gem Diamonds Limited (LSE: GEMD) (“Gem Diamonds”, the “Company” or the “Group”) today announces its half year results for the six months ending 30 June 2013 (“H1 2013” or “the Period”).
- Revenue of US$ 96.5 million (US$ 122.6 million* in H1 2012).
- Underlying EBITDA of US$ 33.2 million (US$ 46.0 million* in H1 2012).
- Attributable net profit of US$ 8.6 million (US$ 14.3 million* in H1 2012).
- Basic EPS of 6.23 US cents (10.36* US cents in H1 2012).
- Cash on hand of US$ 61.4 million as at 30 June 2013 (US$ 54.5 million attributable to Gem Diamonds).
* Prior Period figures have been restated for the reclassification impact of accounting for discontinued operations
- Ore mined of 3.1 million tonnes and ore treated of 3.0 million tonnes.
- Waste tonnes mined of 9.9 million tonnes.
- Installation of the four cone crushers in Letšeng’s Plants 1 and 2 completed on time and within budget.
- 3 diamonds greater than 100 carats were recovered.
- Subsequent to Period end, an exceptional 99 carat, type II white diamond was recovered and is largely undamaged.
- Installation of four cone crushers expected to reduce diamond breakage
- The sand portion of the access decline was completed and the open face tunnel shield successfully removed.
- Tunnel development through competent basalt continues to progress well. The next 12 months will see a further 514 meters of basalt ramp development, followed by production development. First production is targeted for H2 2014.
- US$ 59.8 million of the total capital budget of US$ 96.0 million has been spent to date.
Commenting on the results today, Clifford Elphick, Chief Executive of Gem Diamonds, said:
“As indicated previously, the first half of 2013 was a difficult Period for the Letšeng mine. Mining focused on the lower grade, lower value Main pipe as planned. Cost control was paramount during this Period and it was pleasing that the mine was able to deliver a satisfactory EBITDA margin and bottom line profit. We look forward to moving steadily into higher grade parts of the ore body in the second half of the year.
During the Period four new cone crushers, which are aimed at reducing diamond damage, were installed at Letšeng’s 1 and 2 Plants on time and on budget. As mining for the second half of the year gradually includes more, higher value Satellite pipe ore, it is anticipated that this combined with the potential effect of reduced diamond damage will be positive on revenues.
Three diamonds greater than 100 carats recovered at Letšeng during the Period, and pleasingly a further two large diamonds were recovered in August - an exceptional 99 carat, type II white diamond and a lower value 146 carat diamond were recovered and importantly, are largely undamaged, providing an early indication of the positive impact of the new crushers.
We continue to make good progress with additional initiatives assessing opportunities to target low capex, low risk options to expand production incrementally as well as enhance efficiencies and diamond recoveries through the introduction of new technology.
At Ghaghoo, the development of the access decline is progressing well and the first diamonds are expected to be mined in the second half of 2014 The operations team at Ghaghoo are to be complimented on completing the difficult and technically challenging sand portion of the decline and management has every confidence in the success of Ghaghoo as a strong contributor to Gem Diamonds’ bottom line in the coming years.
In line with our focus on implementing rigorous cost control and cost reduction measures across the business as we work to adapt to a changing economic environment, it is important to note that with the rationalisation of the Company’s assets has come a reduction of staff and corporate expenses are already in line with targeted reductions."
The Company will be hosting an audio presentation on its half year results today, 15 August 2013, at 9:30 am BST. A live audio webcast of this presentation will be available on the Company’s website: www.gemdiamonds.com
FOR FURTHER INFORMATION:
Gem Diamonds Limited
Sherryn Tedder, Investor Relations
Tel: +27 (0) 11 560 9600
Mob: +27 83 943 4505
Pelham Bell Pottinger
Charles Vivian / James MacFarlane
Tel: +44 (0) 207 337 1500861 3232
ABOUT GEM DIAMONDS:
Gem Diamonds is a leading global diamond producer of high value diamonds. The company owns 70% of the Letšeng mine in Lesotho as well as 100% of the Ghaghoo mine, currently in development in Botswana. The Letšeng mine is famous for the production of large, exceptional white diamonds, making it the highest US dollar per carat kimberlite diamond mine in the world. Since Gem Diamonds’ acquisition of Letšeng in 2006, the mine has produced four of the twenty largest white gem quality diamonds ever recorded.
Gem Diamonds has a growth strategy based on maximising the value of the Letšeng mine and developing the Ghaghoo mine, while maintaining its strong balance sheet. The Company seeks to maximise revenue and margin from its rough diamond production by pursuing cutting, polishing and sales and marketing initiatives further along the diamond value chain. With favourable supply/demand dynamics expected to benefit the industry over the medium to long term, particularly at the high end of the market supplied by Gem Diamonds, this strategy positions the Company well to generate attractive returns for shareholders in the coming years.